Political Maneuvering
     The apparent suddenness of the shift sparked widespread debate that the move was aimed at helping boost the profile of vice president and Democrat presidential candidate Al Gore. Gore has been falling behind presidential rivals ex-Sen. Bill Bradley D-NJ and Texas Governor George W. Bush in raising money from the high-tech industry. Loosening encryption controls has been among the top policy priorities for the industry since Clinton took office, and Gore has always been involved intimately with moving encryption policy along within the administration, according to interviews with industry lobbyists, former and current Administration staff and congressional staff.
     In addition, a day after the White House announcement, Gore attended a fundraiser in Silicon Valley, as part of a broader campaign swing through California.
     "The vice president's desire to appeal to the high-tech community was a factor," said Dave McCurdy, president of the Electronic Industries Alliance and former chair of the House Intelligence Committee, when the Democrats controlled the House.
     On another political front, the White House was facing imminent defeat on its encryption position in the House, where the Security and Freedom through Encryption Act, H.R. 850, was about to hit the floor with strong bipartisan support. While SAFE would have faced a much tougher fight in the Senate, the administration would have been forced to formally draft its opposition to the bill, even though the Democratic leadership and head of the House's Democrat fundraising organization was supporting the bill. A Democrat leadership source said the administration decided it had to reframe encryption policy on their terms rather than cede it to Congress and lose control of the issue.
     "The administration's back was against the wall and they didn't want to be embarrassed…it was a political decision," said Peter Harter, who, as former head of global public policy for Netscape Communications, had been lobbying on encryption since 1994. Harter is now head of policy at EMusic.com.
     But underneath the politics was a confluence of events that had forced the administration toward developing a change in policy before the current political scene developed. Stewart Baker, former general counsel for the National Security Agency, said he had gotten wind that the current policy shift was "a live option" many months ago.

Practical Planning
     At that point, it had finally become apparent within the administration that its attempts to garner international support for encryption controls were failing and the U.S. had become isolated in its position. Harter said France, Germany, Canada, Japan and the United Kingdom had all made attempts to control encryption, but with the advent of the worldwide web and the explosion in electronic commerce, ultimately their control plans failed.
     "It became obvious that crypto export controls were not going to last very much longer. In the meanwhile, company after company were moving their crypto capability offshore…and what was worse than losing controls on encryption, was losing control after the U.S. had already lost its lead…so the question became, shouldn't something be done now," Baker said.
     In last week's report to Clinton, Secretary of Defense William Cohen and Reno admitted that the technology was developing so quickly around the world that the U.S. was no longer able to maintain control over the spread of encryption.
     "The federal government has sought to maintain a balance between privacy and commercial interests on one hand and public safety and national security concerns on the other…. preserving this balance has become increasingly difficult with the clear need for strong encryption for electronic commerce, growing sophistication of foreign encryption products and the proliferation of software vendors" the report said. Other authors of the report were Office of Management and Budget Director Jacob Lew and Commerce Secretary William Daley.
     Technology was developing at such a rapid pace that the Defense Department found itself in need of increasingly stronger encryption and it was looking toward the industry to help it develop stronger security. Hamre said at a news conference last week, and several senior administration officials confirmed, that Defense brought forward the White House's final policy change proposal.
     "I understand it came from the security community…the realization landed on people that continuing with incremental changes in encryption were not going to be possible," said Greg Simon, who served as chief domestic policy advisor for Gore between 1993 and 1997.
     During the past year, when the FBI and Defense Department were publicly opposed to relaxing encryption rules, the FBI was privately meeting with industry to determine how it protect security and also help the growing proliferation of encryption products. Harter said he helped organize a number of meetings between high tech companies and the FBI, and many of the ideas that were developed were included in the Cyberspace Electronic Security Act, which would authorize funding for the center to help law enforcement crack encryption in criminal cases.
     "The process helped…underscore the potential for cooperation," a senior administration official said.
     What the final straw was to break the logjam on the administration's position still remains unclear. Attorney General Janet Reno told a news conference that the policy change would make the FBI's job much more difficult. And the administration was reluctant to give anyone credit except the Defense Department for coming up with the proposal, perhaps because there remain genuine fears that a terrorist attack will occur that can't be stopped because of the administration's change in policy and they don't want to bear the blame.
     "People will die because of this decision," Baker said. "There will be a price to pay."

- by Bara Vaida